InvestMacro

The EUR/USD currency pair

• Prev Open: 1.0701
• Prev Close: 1.0716
• % chg. over the last day: +0.14%

The long-awaited ECB monetary policy meeting will be held today. It is highly likely that the ECB will formally announce the end of net asset purchases and schedule the first interest rate hike for July. Analysts are just trying to predict which step of the increase the ECB will choose. But given the conservatism of European politicians and Lagarde’s credibility, the best option is to start with a 0.25% hike. Statistical data also speaks in favor of such a step. The European labor market remains strong, and GDP showed 0.6% growth for the last quarter, higher than the expected 0.3%.

• Support levels: 1.0694, 1.0627, 1.0611, 1.0568, 1.0509, 1.0445, 1.0379
• Resistance levels: 1.0738, 1.0770, 1.0786, 1.0869

From a technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The MACD indicator is back above zero, the price is trading above the moving averages, and there is a slight buying pressure. Under such market conditions, investors can look for buy trades on intraday time frames from the support level of 1.0694, but only with confirmation and short targets. Sell trades can be considered from the resistance level of 1.0770, but only after the additional confirmation. The Euro may be very volatile today, so traders should be very attentive.

Alternative scenario: if the price breaks out through the 1.0611 support level and fixes below, the downtrend will likely resume.

• – Eurozone ECB Interest Rate Decision at 14:45 (GMT+3);
• – Eurozone ECB Monetary Policy Statement at 14:45 (GMT+3);
• – Eurozone ECB Press Conference at 15:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2589
• Prev Close: 1.2535
• % chg. over the last day: -0.43%

May PMI data indicated another slowdown in the UK construction sector. Weak consumer confidence and worries about the outlook for the economy are holding back demand. Higher borrowing costs and strong inflationary pressures were also cited as factors likely to restrain growth over the next 12 months. At the moment, most UK economic indicators are showing a slowdown.

• Support levels: 1.2498, 1.2433, 1.2398, 1.2283, 1.2199
• Resistance levels: 1.2628, 1.2669, 1.2698, 1.2770

The GBP/USD currency pair trend is bullish on the hourly time frame. The MACD indicator has become inactive, but a slight buying pressure remains. A wide price corridor is forming now. Under such market conditions, buy deals may be considered from the support level of 1.2498, but only with additional confirmation and short targets. Sell deals should be looked for from the resistance level of 1.2628, but with confirmation.

Alternative scenario: if the price breaks down through the 1.2433 support level and fixes below, the mid-term downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 132.54
• Prev Close: 134.24
• % chg. over the last day: +1.28%

The Japanese yen continues to decline against major currencies. The Fed is tightening monetary policy, while the Bank of Japan, on the contrary, is keeping policy soft. The US Treasury yields are rising and could rise even higher if US inflation data is worse than forecast on Friday. Rising US yields give confidence to the dollar index. Under current conditions, the Japanese yen is likely to remain depressed against the US dollar in the coming days and weeks. Perhaps the only possibility of a significant bearish reversal of the USD/JPY pair will be a currency intervention by the Japanese government.

• Support levels: 133.00, 132.00, 131.00, 130.12, 129.48, 128.76, 128.10, 127.64
• Resistance levels: 135.16

The medium-term trend on the USD/JPY currency is bullish. The price is steadily growing, and the MACD indicator is in the positive zone, but there are signs of overbought and divergence. It is best to wait for a slight correction, as the price has deviated strongly from the average lines. Buy trades can be considered from the support level of 133.00, but with confirmation. A resistance level of 135.16 is good for sell deals, but only with additional confirmation in the form of a reverse initiative and short targets.

Alternative scenario: If the price fixes below 130.13, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2526
• Prev Close: 1.2557
• % chg. over the last day: +0.24%

The Canadian dollar is a commodity currency, so it depends not only on the dollar index but also on the oil price movements. Oil prices jumped about 3% on Wednesday as gasoline demand in the US continues to grow despite high fuel prices. The fundamental picture is now favorable for both the US dollar and Canadian dollar to strengthen, so do not expect any medium-term trend movements here.

• Support levels: 1.2510
• Resistance levels: 1.2567, 1.2623, 1.2676, 1.2728, 1.2765, 1.2807, 1.2893, 1.2953

The USD/CAD currency pair is bearish in terms of technical analysis. The MACD indicator has become inactive again, and divergence is traced on several time frames. The price is forming a wide sideways. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2510, but it is better to wait for the bullish initiative. For sell deals, it is better to consider the resistance level of 1.2567 or 1.2623, but also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates above 1.2728, the uptrend will likely resume.

• – Canada BoC Gov Macklem Speaks at 18:00 (GMT+3).

The EUR/USD currency pair

• Prev Open: 1.0691
• Prev Close: 1.0704
• % chg. over the last day: +0.12%

Concerns about Italy’s political stability have resurfaced again. There is growing skepticism about whether the Draghi government (in office since February 2021) has the strength to provide economic reforms, mainly to finance next-generation EU modernization projects, before the next general election. There is discontent about the growing income gap between Italy and Germany in Rome. If uncertainty in Italy intensifies, both the euro and ECB policy could be affected.

• Support levels: 1.0672, 1.0627, 1.0611, 1.0568, 1.0509, 1.0445, 1.0379
• Resistance levels: 1.0738, 1.0770, 1.0786, 1.0869

From a technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The MACD indicator has become inactive, the price is trading below the moving averages. Under such market conditions, investors can look for buy trades on intraday time frames from the support level of 1.0672, but only with confirmation and short targets. Sell trades can be considered from the resistance level of 1.0738 or 1.0770, but only after the additional confirmation.

Alternative scenario: if the price breaks out through the 1.0611 support level and fixes below, the downtrend will likely resume.

• – German Industrial Production (m/m) at 09:00 (GMT+3);
• – Eurozone GDP (q/q) at 12:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2529
• Prev Close: 1.2587
• % chg. over the last day: +0.46%

In the UK, the battle for the leadership of the Conservative Party is taking place amid a cost-of-living crisis that threatens to push the economy into recession. This puts pressure on the Bank of England to maintain growth and contain the highest inflation in four decades while keeping up with the Federal Reserve. Johnson’s narrow victory has no clear implications for economic policy and, therefore, for the fundamentals of the pound.

• Support levels: 1.2541, 1.2498, 1.2433, 1.2398, 1.2283, 1.2199
• Resistance levels: 1.2628, 1.2669, 1.2698, 1.2770

The GBP/USD currency pair trend is bullish on the hourly time frame. The MACD indicator became positive, and the buyers’ pressure increased. Yesterday the price sharply rebounded from the priority change level and then fixed above the moving averages. A wide price corridor is forming now. Under such market conditions, buy deals may be considered from the support level of 1.2541 or 1.2498, but only with additional confirmation and short targets. Sell deals should be looked for from the resistance level of 1.2628, but with confirmation.

Alternative scenario: if the price breaks down through the 1.2433 support level and fixes below, the mid-term downtrend will likely resume.

• – UK Construction PMI at 11:30 (GMT+3).

The USD/JPY currency pair

• Prev Open: 131.85
• Prev Close: 132.63
• % chg. over the last day: +0.59%

The Japanese yen has fallen to a 20-year low. Two factors can explain the fall in the yen. The Fed is tightening monetary policy, while the Bank of Japan is easing. And US Treasury yields are rising and are now above the 3 percent level. Rising US yields are giving confidence to the dollar index. As US interest rates move up and the Bank of Japan limits JGB yields, the difference in the US and Japanese interest rates continues to widen, and the risk to the yen remains skewed to the downside.

• Support levels: 132.00, 131.00, 130.12, 129.48, 128.76, 128.10, 127.64, 127.24, 127.04
• Resistance levels: 133.86

The medium-term trend on the USD/JPY currency is bullish. The price is steadily growing, and the MACD indicator is in the positive zone, but there are signs of overbought and divergence. It is best to wait for a slight correction, as the price has deviated strongly from the moving lines. Buy trades can be considered from the support level of 132.00, but with confirmation. A resistance level of 133.86 is good for sell deals, but only with additional confirmation in the form of a reverse initiative and short targets.

Alternative scenario: If the price fixes below 129.48, the downtrend will likely resume.

• – Japan GDP (q/q) at 02:50 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.2574
• Prev Close: 1.2532
• % chg. over the last day: -0.34%

After two months of strong growth in goods imports and exports, imports fell by 0.4%, and exports lost 2.1% in real (physical) terms in April. This is not a good sign for the Canadian currency, but analysts are confident that the decline is temporary. The Canadian dollar is a commodity currency, so it depends on the dollar index and the dynamics of oil prices. Oil prices have reached almost three-month highs, as the supply shortage generally supported the market.The fundamental picture now is favorable to strengthening both the American dollar and the Canadian one, so it is not worth waiting for the mid-term trend movements here.

• Support levels: 1.2537, 1.2510
• Resistance levels: 1.2567, 1.2623, 1.2676, 1.2728, 1.2765, 1.2807, 1.2893, 1.2953

The USD/CAD currency pair is bearish in terms of technical analysis. The MACD indicator is negative again, but the divergence is observed on several time frames. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2537 or 1.2510, but it is better to wait for the bullish initiative. For sell deals, it is better to consider the resistance level of 1.2567, but also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates above 1.2728, the uptrend will likely resume.

The EUR/USD currency pair

• Prev Open: 1.0720
• Prev Close: 1.0695
• % chg. over the last day: -0.23%

An important meeting of the ECB will take place this Thursday, where analysts are waiting for the announcement of the end of the bond-buying program and a clear signal for a rate hike. Given the ECB’s conservatism, the central bank will gradually raise rates by 25 basis points. But the hawkish rhetoric has intensified in recent days, leading some economists to believe the ECB could start with an aggressive raise to cut inflation expectations faster. However, the probability of such a scenario is much lower as a 0.5% rate hike would hit Christine Lagarde’s credibility.

• Support levels: 1.0679, 1.0643, 1.0611, 1.0568, 1.0509, 1.0445, 1.0379
• Resistance levels: 1.0738, 1.0770, 1.0786, 1.0869

From a technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The MACD indicator became negative, the price is trading below the moving averages. Under such market conditions, investors can look for buy trades on intraday time frames from the support level of 1.0679, but only with confirmation and short targets. Sell trades can be considered from the resistance level of 1.0737 or 1.0770, but only after the additional confirmation.

Alternative scenario: if the price breaks out through the 1.0611 support level and fixes below, the downtrend will likely resume.

The GBP/USD currency pair

• Prev Open: 1.2487
• Prev Close: 1.2529
• % chg. over the last day: +0.33%

Boris Johnson received a vote of confidence in the UK Parliament and retained his position as party leader and British Prime Minister for the next 12 months. There were 211 votes in favor and 148 against. The small gap demonstrates that many in the Conservative ranks are pushing for the Prime Minister’s departure, striking at his credibility. The British pound did not particularly react to this event. Given the increasing pressure on the British prime minister and his team, Boris Johnson needs to be more selective in his actions now.

• Support levels: 1.2498, 1.2433, 1.2398, 1.2283, 1.2199
• Resistance levels: 1.2577, 1.2628, 1.2669, 1.2698, 1.2770

The GBP/USD currency pair trend is bullish on the hourly time frame. The MACD indicator has become inactive, but sellers’ pressure remains. The price is trading below the levels of the moving averages. Under such market conditions, buy deals may be considered from the support level of 1.2498, but only with additional confirmation and short targets. Sell deals should be looked for from the resistance level of 1.2577, but with confirmation.

Alternative scenario: if the price breaks down through the 1.2433 support level and fixes below, the mid-term downtrend will likely resume.

• – UK Services PMI at 11:30 (GMT+3).

The USD/JPY currency pair

• Prev Open: 130.85
• Prev Close: 131.88
• % chg. over the last day: +0.78%

On Monday, Bank of Japan Governor Haruhiko Kuroda said that the Central Bank’s top priority is to support the economy, stressing an unwavering commitment to maintaining a “strong” monetary stimulus. The fundamental picture of the USD/JPY currency pair remains the same. The Fed is tightening monetary policy, while the Bank of Japan, on the contrary, holds a soft policy, and nothing will change soon. As a rule, monetary tightening leads to a strengthening of the national currency, while easing, on the contrary, leads to depreciation. As a result, the USD/JPY quotes tend to grow mid-term.

• Support levels: 132.00, 131.00, 130.12, 129.48, 128.76, 128.10, 127.64, 127.24, 127.04
• Resistance levels: 133.86

The medium-term trend on the USD/JPY currency is bullish. The price is steadily rising, and the MACD indicator is in the positive zone, but there are signs of overbought. It is best to wait for a slight correction, as the price has deviated strongly from the moving lines. Buy trades can be considered from the support level of 132.00, but with confirmation. A resistance level of 133.86 is good for sell deals, but only with additional confirmation in the form of a reverse initiative and short targets.

Alternative scenario: If the price fixes below 129.48, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2594
• Prev Close: 1.2578
• % chg. over the last day: -0.13%

The Canadian dollar is a commodity currency, so it depends not only on the dollar index but also on the oil price movements. Both the dollar index and oil prices increased yesterday. The fundamental picture is now favorable to strengthening both the US dollar and the Canadian dollar, so investors should not expect any medium-term trend movement here.

• Support levels: 1.2558, 1.2510
• Resistance levels: 1.2623, 1.2676, 1.2728, 1.2765, 1.2807, 1.2893, 1.2953, 1.3000

The USD/CAD currency pair is bearish in terms of technical analysis. The MACD indicator has become positive, selling pressure has decreased, and divergence is observed on several time frames. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2558, but it is better to wait for the bullish initiative. For sell deals, it is better to consider the resistance level of 1.2623, but also better with confirmation and short targets.

Alternative scenario: if the price breaks through and consolidates above 1.2728, the uptrend will likely resume.

• – Canada Ivey PMI at 17:00 (GMT+3).